UK - UK property firm Savills has announced a £7.7m (€8.3m) loss for 2008 and is adopting a "cautious outlook" for 2009 as it expects challenging times ahead.
The steep property market decline caused revenues to drop to £568.5m from £650.5m recorded the year before. Underlying profit before tax fell sharply from £85.5m to £33.2m, however, Savills insisted its balance sheet and bank facilities until 2011 remained strong.
"The steps we are taking to reduce costs combined with our strategy of reducing dependence on transactional income will continue to serve us well," said
Jeremy Helsby, group chief executive of Savills.
"We remain alert to the challenges ahead and will continue to focus on cost discipline, prudent capital management and, most importantly, providing the very highest service to our clients," continued Helsby.
Savills secured £22m of cost savings and agreed a new three-year facility worth £80m in 2008, and disposed of its 50% stake in Infinergy Limited to its joint partner in the business for £23m, which generated a profit of £16.9m
Savills expects fewer property transactions in 2009, as a result of tough lending markets and investor uncertainty.
"A return to higher levels of activity will depend on how quickly confidence returns to the financial markets. However we remain well positioned to seize opportunities as, and when, they arise," said Helsby.
That said, the firm also believes further falls in property values and the devaluation of sterling could draw international investors to the UK, though investors are expected to be more reluctant to invest in Asia because of the volatility of the markets.
Savills aims to develop its transactional business in the United States, which it believes will lead the way out of the recession, to position it to take advantage of capital flows leaving and entering the markets there.
The transactional business was hardest hit last year, with profits before tax plunging to £3.2m compared to £48m in 2007.
Cordea Savills, the firm's fund management business, saw funds under management decrease to £3bn compared to £3.5bn as a result of property devaluations and the disposal of funds. Revenue, however, increased to £19.5m compared to £15.4m the year before.
As at December 31 2008, Savills had £211.0m of assets under management, down from £223.6m recorded for the same time in 2007.
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